Property database delay frustrates China's anti-graft drive

Published 7:48 PM ET Wed, 2 Oct 2013
Reuters

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China's plan for a nationwide property database, once hailed as an antidote to corruption, has stalled amid resistance from local governments that illustrates the difficulty Beijing faces in driving through reforms to tackle widespread graft.

The database is not only seen as vital for authorities to control a frothy housing market - it would also force corrupt local officials to come clean about properties purchased from ill-gotten gains, industry experts say.

Since taking office in March, Chinese President Xi Jinping has called corruption a threat to the ruling Communist Party's survival and authorities have announced the investigation or arrest of several senior officials.

But, as the failure of the property database initiative to gain traction shows, top-down plans to root out graft can be stymied by entrenched interests at the local level.

"There are various concerns over the possible consequences of the nationwide database, especially for some officials who have the power of affecting the process," said Chen Guoqiang, vice chairman of China Real Estate Society. "They will delay such moves intentionally."

The digital database, which would enable users to see how many properties a person owns as well as details about the homes, has been in the works since 2010.

It would also show additional property purchases by homeowners, which would aid central government authorities in cooling speculation in urban housing markets.

Though much of that information is already collected in some form by authorities, local officials have balked at the idea of an easily searchable, central record of home purchases.

The first 40 major cities enlisted in the plan refused to sign on until the housing ministry agreed the information they disclosed would not be made publicly available, industry experts said.

"China must eventually make the database transparent," said Fan Jianjun, a senior economist at the Development Research Center, one of China's leading government think-tanks. "Otherwise, how can people believe it?"

Multiple homes

The second phase of the plan, which was supposed to be completed by June and include 500 more cities, has not yet come to fruition.

China's Ministry of Housing and Urban-Rural Development has not commented on the reason for the delay, but state media have blamed resistance from local officials.

"Hopes have crumbled to nothing again," the official Xinhua news agency said in June. "Some local governments and departments are not collaborative."

The property database, despite its benefits for the housing market, presents a threat to officials trying to hide multiple luxury homes.

Tian Guoliang, a professor at the Central Party School who conducts research on corruption issues, told state media this summer that the database would disclose the property status of government officials in sensitive positions, including the power, rail and banking sectors.

This could help keep anti-graft authorities clued in on what officials were buying, he said.

The official China Daily said in July that it was widely suspected the delays in establishing the database were due to "opposition from vested interest groups".

"Whether the program can ultimately be carried out is a major test of the political will and capability of the central government in responding to the public's call for a healthy and corruption-free real estate market," the state-run paper said.

In recent months, Chinese media have abounded with reports of local officials caught owning homes they could not possibly have purchased on a meager public servant's salary. Known in online parlance as "property uncles" or "aunts", they have become targets of public anger.

In a particularly high profile case, Cai Bin, an urban management official in the southern city of Guangzhou, was sacked last October after investigators said he owned more than 20 homes, Xinhua reported, even though his official salary was only about 10,000 yuan ($1,600) a month.

He was found guilty of corruption charges in September and sentenced to 11-and-a-half years in prison.

Fight against graft

Some high-ranking central government officials have publicly voiced support for asset disclosure rules as necessary elements of President Xi's fight against graft.

Wang Yang, a member of the Politburo and one of the country's four vice premiers, said in November he believed Chinese officials should make their assets public.

Yu Zhengsheng, the fourth-ranked member of the elite Politburo Standing Committee, also spoke out in favor of asset disclosure and said he would not hesitate to publish what he owns.

But among many officials any form of asset disclosure is suspect, sparking fears of retribution from a public that has become increasingly critical of government extravagance.

"The local leaders, they know they will be the ones to face the music, and society's resentment," said Jean-Pierre Cabestan, a political scientist at Hong Kong Baptist University who has followed the property database issue.

"Communities at the local level are small, and local cadres will be very nervous about it, much more nervous than those in Beijing."

Experts said the current record-keeping system for residential property, which is not consolidated or comprehensive, is not sufficient to monitor the housing market in an effective way.

China's only housing census was done in 1986 and its economic census in 2010 did not cover housing surveys. Neither will this year's economic census. Many cities also lack historical home ownership data.

"This is a very frustrating dilemma for policymakers," said Rosealea Yao of GaveKal Dragonomics. "One thing they can improve is to have a better understanding of this market. I think this database should play an important role."

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